This Indian state is exempted from paying taxes; Here's why

The budget for FY 24-25 was announced on July 23 by the new Modi 3.0 government. During her 62-page long speech Finance Minister Nirmala Sitharaman announced a lot of changes including several changes to the tax regime. The increased standard deduction for salaried employees has received various reactions from people. While some are supporting the government's decision, some are not so happy with the dent in their pocket.The whole country is debating whether the old tax regime is better or the new tax regime. But far from this debate and the chaos of taxes is a state that is unbothered.
Under the Section 10 (26AAA) of the Indian Income Tax Act, the northeastern state of Sikkim is the only state in India that is exempted from paying taxes. Sikkim, was an erstwhile princely state for more than 330 years. However, in 1975 Sikkim merged into India, making it the 22nd state of India. This merger happened on one condition, that Sikkim’s old tax structure would continue post-merger. According to Sikkim’s tax manual, a citizen of Sikkim does not have to pay any tax to the Centre regardless of their income.
Section 10 (26AAA) of Income Tax introduced in 2008 reads that any income earned or derived from a source in Sikkim or by anyone residing in the state through dividends or interests on securities is exempted from paying taxes. Any individual who has been a domicile of the state of Sikkim as of April 26, 1975 would be exempted from paying taxes. This status is secured in Sikkim's special status under Article 371(f) of the Indian Constitution. Additionally it is not mandatory for Sikkim citizens to provide PAN details for investments in Indian securities and mutual funds.
This exemption is not valid for rental incomes from properties outside Sikkim or any income that is being sourced from outside the state. This exemption is also not applicable for Sikkimese women who marry someone who is not a resident of the state after April 1, 2008. This argument was challenged in the courts; however, the Supreme Court of India upheld it in 2008.
With the Indian taxpayers panicking about filing ITR before every July 31, Sikkim residents remain unfazed. The members of Scheduled Tribes belonging to the states of Tripura, Mizoram, Manipur, Nagaland, Assam, and Arunachal Pradesh are exempted from paying taxes. The tribes living in the Ladakh region and the Union Territory of Jammu and Kashmir don’t have to pay taxes.